Monthly Archives: December 2009

“…Firms that obtain free [emis­sion] per­mits can­not sell them on exit from the indus­try. This encour­ages them to con­tin­ue to oper­ate even if their out­put could be more cheap­ly sup­plied by oth­ers. The com­pen­sa­tion to house­holds is even worse. Those pay­ments will be income-based, phas­ing out as income ris­es. This will increase mar­gin­al tax rates that are already high, with the lost com­pen­sa­tion mean­ing that each addi­tion­al dol­lar in pre-tax earn­ing could trans­late into less than 60c of take-home pay.” Extract from Hen­ry Ergas inThe Aus­tralian

The Copen­hagen con­fer­ence has put Chi­na on a high­er and broad­er world stage. Chi­na has rea­son to be proud and Chi­na will work even hard­er! Ver­dant moun­tains can­not stop water flow­ing; east­ward the water keeps on going.

The report pro­vides a detailed account of Pre­mier Wen’s move­ments and con­sul­ta­tions over three days in Cophen­hagen. No men­tion, how­ev­er, of any talks with ‘Friend of the Chair’ and ‘true friend’ of Chi­na, Kevin Rudd.

“We live in an era in which unprece­dent­ed glob­al­iza­tion and eco­nom­ic inter­de­pen­dence, lib­er­al-demo­c­ra­t­ic hege­mo­ny, nan­otech­nol­o­gy, robot­ic war­fare, the ‘infos­phere,’ nuclear pro­lif­er­a­tion and geo­engi­neer­ing solu­tions to cli­mate change coex­ist with the return of pow­er­ful auto­crat­ic-cap­i­tal­ist states, of a new Great Game in Cen­tral Asia, of impe­ri­al­ism in the Mid­dle East, of pira­cy on the high seas, of rival­ry in the Indi­an Ocean, of a 1929-like mar­ket crash, of 1914-style hyper­na­tion­al­ism and eth­nic con­flict in the Balka­ns, of war­lords and failed states, of geno­cides in Bosnia, Rwan­da and Dar­fur, and of a new holy war waged by rad­i­cal Islamists com­plete with caliphates and behead­ings rem­i­nis­cent of medieval times.” Extract fromThe Nation­al Inter­est

(Nan­otech­nol­o­gy?)

Here’s a more sober, more plau­si­ble, assess­ment of the like­ly route for the glob­al gov­er­nance frame­work (at least) from the U.S. Nation­al Intel­li­gence Coun­cil:

The exist­ing inter­na­tion­al organizations—such as the UN, WTO, IMF, and World Bank—may prove suf­fi­cient­ly respon­sive and adap­tive to accom­mo­date the views of emerg­ing pow­ers, but whether the emerg­ing pow­ers will be given—or will want—additional pow­er and respon­si­bil­i­ties is a sep­a­rate ques­tion. Indeed some or all of the ris­ing pow­ers may be con­tent to take advan­tage of the insti­tu­tions with­out assum­ing lead­er­ship bur­dens com­men­su­rate with their sta­tus. At the same time, their mem­ber­ship does not nec­es­sar­i­ly have to involve heavy respon­si­bil­i­ties or bur­den-shar­ing, allow­ing them to pur­sue their goals of eco­nom­ic devel­op­ment.

That veiw from mid-2008 is hold­ing up pret­ty well, so far…except that ‘accom­mo­dat­ing views’ does not mean doing any­thing. Which explains much about why WTO is stymied and why the Copen­hagen con­fer­ence of the UN Cli­mate Con­ven­tion was a farce (there are oth­er rea­sons, too, in each case).

Unless you’ve been asleep since the mid-1930s (when the League of Nations fell apart), the fail­ures of the UN Cli­mate Con­ven­tion in Copen­hagen or the World Trade Orga­ni­za­tion in Gene­va to reach agree­ment should come as no sur­prise.

It’s not the end of the world (or even of mul­ti­lat­er­al­ism) but it’s an his­toric moment, all the same. I sus­pect it marks the icon­ic end of the pax atlanti­ca; the benign dis­pen­sa­tion that has, since its birth aboard HSM Prince of Wales in August 1941, been the engine and guar­an­tor of mul­ti­lat­er­al­ism as embod­ied in the U.N., the WTO, the World Bank, IMF and the rest of the inter­na­tion­al para­pher­na­lia.

When an econ­o­my has trade lever­age, the threat of dis­crim­i­na­to­ry duties need not be sim­ple pro­tec­tion­ism.

“The US can help Chi­na make the nec­es­sary adjust­ments toward a reduc­tion in imbal­ances by adopt­ing a uni­form tar­iff of 10 per cent on all Chi­nese imports, based on their val­ues when they enter the US. Six months after the estab­lish­ment of this tar­iff, the rate would increase by one per­cent­age point a month until the Chi­nese trade sur­plus with the US declines to $5bn a month.” Extract fromFT.com / Com­ment / Opin­ion — Tar­iffs can per­suade Bei­jing to free the ren­min­bi

But who, oth­er than Chi­na, would loose if this idea worked and the Ren­min­bi was reval­ued? Most of the rest of the world. Espe­cial­ly economies with a com­par­a­tive advan­tage in agri­cul­tur­al pro­duc­tion (Aus­tralia, New Zealand, Latin Amer­i­ca) for whom import­ed Chi­nese defla­tion of man­u­fac­tures prices off­sets the EU’s depres­sion of agri­cul­tur­al prices (and infla­tion of man­u­fac­tures prices).

In prin­ci­ple, too, every­one would loose from anoth­er U.S. defec­tion from the core mul­ti­lat­er­al trade rules. But per­haps you could make the case that this kind of extra­or­di­nary action (like the 1980’s Nixon Admin­is­tra­tion ‘shocku’ blow against Japan) doesn’t real­ly impact the rules.

Like the ‘Car­bon Pol­lu­tion Reduc­tion Scheme’, this is appalling twad­dle. The main ‘GHG’, CO2, and the cycle of ener­gy dis­tri­b­u­tion that it medi­ates through­out the bios­phere is essen­tial to just about every form of life on earth.

“After a thor­ough exam­i­na­tion of the sci­en­tif­ic evi­dence and care­ful con­sid­er­a­tion of pub­lic com­ments, the U.S. Envi­ron­men­tal Pro­tec­tion Agency (EPA) announced today that green­house gas­es (GHGs) threat­en the pub­lic health and wel­fare of the Amer­i­can peo­ple. ” Extract fromU.S. EPA Press Release

Peter Gallagher

Peter Gallagher is student of piano and photography. He was formerly a senior trade official of the Australian government. For some years after leaving government, he consulted to international organizations, governments and business groups on trade and public policy.

He teaches graduate classes at the University of Adelaide on trade research methods and the role of firms in trade and growth and tweets trade (and other) stuff from @pwgallagher